BILL NUMBER: AB 2079	CHAPTERED  09/27/00

	CHAPTER   757
	FILED WITH SECRETARY OF STATE   SEPTEMBER 27, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 26, 2000
	PASSED THE ASSEMBLY   AUGUST 23, 2000
	PASSED THE SENATE   AUGUST 22, 2000
	AMENDED IN SENATE   AUGUST 18, 2000
	AMENDED IN ASSEMBLY   APRIL 4, 2000

INTRODUCED BY   Assembly Member Granlund

                        FEBRUARY 22, 2000

   An act to amend Sections 7735 and 7736 of the Business and
Professions Code, relating to funeral arrangements.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2079, Granlund.  Preneed funeral arrangements.
   The Funeral Directors and Embalmers Law provides for the licensing
and regulation of funeral directors and embalmers by a program under
the supervision and control of the Director of Consumer Affairs.  A
violation of these provisions is a crime.
   Existing law regulates agreements relating to preneed funeral
arrangements, under which a consumer pays a funeral establishment in
advance for services, property, or merchandise not immediately
required.  Under these provisions, the money or securities are held
in trust, and income from the corpus of the trust may be used for
certain purposes, including the payment of a reasonable annual fee
for administering the trust, including a trustee fee, which is to be
determined by the Funeral Directors and Embalmers Program.
   This bill would delete the requirement for the annual
administration fee to be determined by the Funeral Directors and
Embalmers Program.  This bill would provide that the annual fee for
trust administration may be recovered by withdrawals from accumulated
trust income, provided that the total withdrawals for this purpose
shall not exceed  the amount determined by the Cemetery and Funeral
Bureau of the Department of Consumer Affairs, but not to exceed the
total amount of posted trust income in the immediate 12 preceding
months.  This bill would make other related changes.
   Because a violation of the bill's provisions would be a crime,
this bill would impose a state-mandated local program by changing the
definition of a crime.
  The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state.  Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 7735 of the Business and Professions Code is
amended to read:
   7735.  No funeral establishment licensed under the laws of the
State of California, or the agents or employees of a funeral
establishment, shall enter into or solicit any preneed arrangement,
contract, or plan, hereinafter referred to as "contract," requiring
the payment to the licensee of money or the delivery to the licensee
of securities to pay for the final disposition of human remains or
for funeral services or for the furnishing of personal property or
funeral merchandise, wherein the use or delivery of those services,
property or merchandise is not immediately required, unless the
contract requires that all money paid directly or indirectly and all
securities delivered under that agreement or under any agreement
collateral thereto, shall be held in trust for the purpose for which
it was paid or delivered until the contract is fulfilled according to
its terms; provided, however, that any payment made or securities
deposited pursuant to this article shall be released upon the death
of the person for whose benefit the trust was established as provided
in Section 7737.  The income from the trust may be used to pay for a
reasonable annual fee for administering the trust, including a
trustee fee to be determined by the bureau, and to establish a
reserve of not to exceed 10 percent of the corpus of the trust as a
revocation fee in the event of cancellation on the part of the
beneficiary.  The annual fee for trust administration may be
recovered by withdrawals from accumulated trust income, provided that
total withdrawals for this purpose shall not exceed the amount
determined by the bureau.  In no case shall the total amount
withdrawn in a year for trust administration exceed the total amount
of posted trust income for the immediate 12 preceding months.  In
addition to annual fees and reserves authorized by this section, a
trustee may, at its election, pay taxes on the earnings on any trust
pursuant to Section 17760.5 of the Revenue and Taxation Code.  In no
event, however, shall taxes paid on the earnings of any trust be
considered part of the fees or reserves authorized by this section.
All remaining income shall be accumulated in trust.
   None of the corpus of the trust shall be used for payment of any
commission nor shall any of the corpus of the trust be used for other
expenses of trust administration, or for the payment of taxes on the
earnings of the trust.
  SEC. 2.  Section 7736 of the Business and Professions Code is
amended to read:
   7736.  For the purposes of this article the term "trustee" shall
mean any banking institution or trust company legally authorized and
empowered by the State of California to act as trustee in the
handling of trust funds or not less than three persons one of whom
may be an employee of the funeral establishment; the word "trustor"
shall mean any person who pays the money or deposits the securities
used for those preneed arrangements; the term "beneficiary" shall be
the person for whom the funeral services are arranged; the words
"corpus of the trust" shall include all moneys paid and securities
delivered by the trustor pursuant to the provisions of the article.

  SEC. 3.  No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.
